Treasury to recapitalize Kenya Airways to the tune of Ksh.7.5 billion

The government is expected to pump in additional capital as it seeks to transition Kenya Airways (KQ) into a fully owned State entity. According to disclosures made in the National Aviation Management Bill which is the subject of adoption by the National Assembly, KQ will as a new outfit carry a new share capital of Ksh.7.5 billion upon nationalization. At present, Kenya Airways share capital is estimated at Ksh.5.8 billion as of December 31 based on its issued shares at the Nairobi Securities Exchange (NSE). KQ’s total equity however sits at a negative Ksh.17.9 billion taking to account its accumulated losses over the years. The National Aviation Management Bill is expected to chart a way forward in the nationalization of Kenya Airways in a process that includes the buying out of minority shareholders. The National Treasury controls a 48.9 percent stake in the firm while local commercial banks hold a 38. 1 percent stake under the KQ Lenders Company 2017 Limited after a debt-equity conversion undertaking three years ago. The operation of Kenya Airways and the Kenya Airports Authority (KAA) are expected to come under the wings of the Kenya Aviation Corporation- a new corporate entity born out of a decision to merge the two firms in a view to strengthen the competitiveness of Kenya’s aviation sector. The reborn KAA will meanwhile carry a new initial capital of Ksh.66 billion while the union approved by the National Assembly last year has further birthed a new outfit-the Aviation Investment Corporation which carries a Ksh.1 million share capital. The third entity will be in charge of aviation training schools, aircraft handling, flight catering, aviation medical services and holiday management services. The government is expected to keep funding Kenya Airways through the Kenya Aviation Corporation Fund which is to the financed from budgetary allocations, proceeds from the passenger service charge and grants and loans. Both KQ and KAA will transition to become operating entities under the Kenya Aviation Corporation which is to be managed by a board of directors with a Chairperson appointed by the President. A new National Civil Aviation Council chaired by a Chairperson and drawing memberships from the Transport, Interior and Treasury Cabinet Secretaries is expected to act as oversight for the new Corporation. The new Corporation bringing KQ and KAA under one roof follows the mooted joint venture between the two proposed first by Kenya Airways in 2018.

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